Is an online ticketing aggregator, BookMyShow, an ecommerce model like no other?

Bringing G7 onboard is probably a bigger achievement for BookMyShow than a deal signed with PVR Cinemas back in 2013.Suman Layak&G Seetharaman | ET Bureau | February 01, 2016, 08:35 IST

The G7 multiplex in the suburb of Bandra in Mumbai is not really a multiplex. Built next to the Western Railway tracks, between the Bandra and Khar Road stations, it’s actually a group of seven theatres, with separate box offices.

When in Bandra, don’t look for G7, if you want to find it. Instead ask for Gaiety-Galaxy and you will be easily directed to a lane off Swami Vivekananda Road.

All the seven theatres have names starting with the letter G (The other five are Gem, Gemini, Glamour, Gossip and Grace). Inside, the complex is a maze with narrow stairways leading to the theatres that were built in the early ’70s, Gaiety and Galaxy being the bigger ones.

The G7 theatres were also a black marketer’s paradise. For popular shows, more tickets are sold by touts on the pavements outside at a premium than at the counters.

So, when BookMyShow (BMS), an online ticketing aggregator for movie and events, announced in mid-January that it had signed up G7, it was indeed a surprise.

Behind the Glitz

Bringing G7 onboard is probably a bigger achievement for BMS than a deal signed with PVR Cinemas back in 2013.

PVR had been the last major multiplex chain to not offer its tickets on the BMS platform. The 2013 deal between the two guaranteed Rs 1,000 crore of business for PVR Cinemas in five years.

G7 on the other hand is manifestation of a conviction of the BMS management that there is growth lurking in the less glitzy and often dusty avenues of Indian cinema.

In January 2016, along with G7, BMS also announced the coming on board of Maratha Mandir, the iconic 1,000-seater single screen theatre near central Mumbai which still runs a daily 11:30 am show of Dilwale Dulhaniya Le Jayenge.

The tickets for DDLJ are priced as low as Rs 15. The highest price at G7 or Maratha Mandir on any regular day (for a movie like Airlift) hovers around Rs 100. BMS typically charges a fee of 10-30% on tickets from the buyers.

For the Rs 15 ticket at Maratha Mandir it charges Rs 3. Multiplexes like PVR are in a different league with premium offerings sometimes commanding more than Rs 500 a ticket.

In spite of the low prices outside multiplexes, growth for BMS hinges less on multiplexes and more on single-screen and traditional cinemas. And not just in big cities but more and more in the hinterland.

BMS today has 2,500 screens on its portal and mobile app, with all major multiplexes on board. India on the other hand has around 12,000 screens of which only 2,000 are multiplexes.

As a growth avenue it does not seem a lucrative path. First, ticket values and therefore margins are even lower and as one goes into tier II and tier III cities, online payment becomes a problem.

Second, movie ticket pricing is a highly regulated regime with different rules for different states, and ticket pricing has to be announced in advance to the authorities. BMS, on top of that, is already a virtual monopoly in the Indian market.

All other significant competitors in movie ticket booking that accounts for more than 60% of its revenues (88% by volume) have either folded up or have been acquired (in 2013 BMS acquired Chennai based online movieticket seller TicketGreen).

KyaZoonga, which claims to be India’s first online movie tickets aggregator, having started selling in April 2007, has over the years moved away from movie tickets and focused on higher-margin sports and other live events, particularly exclusive partnerships.

“The pressure on the margins in movie tickets did not make sense. Not only were multiplexes not paying us to sell their tickets, they also wanted a share of the convenience fee,” says Neetu Bhatia, cofounder, Kya-Zoonga. The portal, which was the exclusive ticketing partner for the 2011 Cricket World Cup, lost the bid to sell tickets to this’s year’s Rio Olympics to CTS Eventim, a German company.

In 2014-15, the first full year with PVR on board, BMS recorded revenues of Rs 127.6 crore, a growth of 51%. Although the company finished the year in the red, with a net loss of Rs 13.5 crore, it was the second consecutive year of 50% plus growth for the company.

In June 2014, SAIF Partners, a private equity firm, valued the company at Rs 1,000 crore when it invested Rs 150 crore; that amount has till date been largely untouched.

Ashish Hemrajani, Parikshit Dar and Rajesh Balpande founded Bigtree Entertainment, the company that owns BMS, in 1999 after the trio took a vacation in South Africa. Bigtree started by selling a ticketing software called Vista made by a New Zealand-based company to multiplexes that were coming up at the time.

“If you look at us today, the things we do are virtually the same that we were doing a decade back,” says Hemrajani. Sticking to the core is the company’s secret sauce, insists Hemrajani, something that ensured they survived a couple of downturns.

Hemrajani is clear that he is not going to offer discounts in the hunt for valuations. He remembers very well the days in 2001-02 when the company had to let go of staff, was reduced to six people and did not have money to even buy air tickets to Delhi.

And even as the likes of Paytm, a payment wallet and an ecommerce marketplace with permission to launch a payment bank, has declared its intention to offer discounted tickets for movies, Hemrajani insists that BMS has no plans to convert its own closed-loop wallet into anything else to compete.

Not Really Ecommerce?

"If your business model is to gather unique identities and phone numbers and build up a list that you can sell, you might as well stand on the street and offer Rs 100 for every person willing to share his number. You will find many takers, but we are not in this game,” Hemrajani says. “We live and die by the value we provide to our users.”

Hemrajani and Dar met ET Magazine in a meeting room designed like an open air theatre at the BMS office in Andheri in suburban Mumbai.

The balcony outside often doubles up as a bigger meeting space and a strategically-placed bicycle decorated with LED lights adds to the optics. The lobby chairs all seem to be lifted out of a cinema and the walls are actually ripped out of large transport containers.

BMS has around four containers that have been fabricated to work as entry gates to events with turnstiles, and transports them on large trailer trucks whenever it is managing an event. Services like managing entry to large events and managing access for security personnel are some of the alternative revenue streams, as are ticket sale for events, plays and some of the Indian Premier League franchisees.

(It recently sold Filmfare awards tickets, offering a chance to buyers to rub shoulders with stars). Sreedhar Prasad, partner and head of ecommerce at KPMG, feels all this is not enough for BMS to jump into the big league of Indian ecommerce.

“In fact they are not really an ecommerce company. They have no control over the inventory and have no way of influencing sales,” says Prasad. He explains that a Flipkart or a Snapdeal clocks revenues from at least seven or eight different streams, including vendor commission, logistics commission, payment commission and advertising.

“There is no evidence of any transformational thinking at BMS. Why can’t they tie up with Uber and Ola and offer a ride to the cinema and a ride back home along with the ticket?” Prasad asks. He further suggests that there can be many ways of pushing sales like location specific inputs. “If I am going past a cinema or an event venue I could get an update from BMS telling me that there are unsold tickets available.”

Offering a little extra to users is something BMS is beginning to do. The website for instance now allows users to look for events that are happening in and around the city, or even group events for kids in a single place.

It has also created a new service for ratings of movies and urges actual ticket buyers to rate a movie. The ratings have surprised the team (see Movie Ratings) and good ratings especially for regional flicks have spurred on distributors to book more screens for some of them.

“There is no evidence of any transformational thinking at BMS. Why can’t they tie up with Uber and Ola and offer a ride to the cinema and a ride back home along with the ticket?” Prasad asks. He further suggests that there can be many ways of pushing sales like location specific inputs. “If I am going past a cinema or an event venue I could get an update from BMS telling me that there are unsold tickets available.”

Offering a little extra to users is something BMS is beginning to do. The website for instance now allows users to look for events that are happening in and around the city, or even group events for kids in a single place.

It has also created a new service for ratings of movies and urges actual ticket buyers to rate a movie. The ratings have surprised the team (see Movie Ratings) and good ratings especially for regional flicks have spurred on distributors to book more screens for some of them.

Numbers Game

Hemrajani insists that the growth strategy would be more vertical than horizontal; moving deeper into the country and finding more screens and at the same time looking for openings into markets abroad.

The company already has a presence in New Zealand as an extension of Bigtree’s earlier relationship and is looking at a possible entry into Indonesia, which is a market similar to India, says Hemrajani. There is also a merchandise play in the offing and the website may sell products built around a movie’s theme or characters. It recently sold 600 T-shirts around the movie Star Wars: The Force Awakens.

However, the question raised by Prasad of KPMG finds an echo in the numbers of BMS and Bigtree Entertainment. For 2013-14, the three ecommerce majors of India, Flipkart, Amazon and Snapdeal, recorded revenues of Rs 179 crore, Rs 168 crore and Rs 154 crore respectively, as per data from Techcircle, an entrepreneurship and technology startup portal; and all of them at the same point were incurring losses that were much more than their revenues.

In 2014-15, the losses grew manifold, becoming less of an indicator of the profitability of the business and more of the quantum of discounts are being doled out. The current year will see another humongous growth in losses.

On the other hand Bigtree’s 2014-15 revenues at Rs 127.6 crore are similar to the revenue of the big three in 2013-14, but its loss of only Rs 13.5 crore indicates that company is playing in a different and smaller league. Its value of ticket sales (around Rs 1,000 crore) also cannot be compared to the gross merchandise value of the ecommerce biggies.

Hemrajani says: “We can be profitable very quickly. In fact in some quarters of the year we are profitable.” Clearly, BMS is content being a sizeable fish in a smaller pond — rather than in a sea of red.